2019 (6) TMI 79 - AT - Customs

Revocation of CHA License - forfeiture of security deposit - imposition of penalty - prohibition on the appellant to operate at the Kandla Port as a customs broker - HELD THAT - While lifting the Prohibition Order, the Commissioner observed that the lifting of the Prohibition Order is subject to further outcome of proceedings initiated by the Commissioner of Customs, Bangalore. Further, in the meantime, the Commissioner of Customs, Bangalore on the basis of said Prohibition Order issued the SCN to the appellant alleging violation of various Regulations as prescribed in CBLR, 2018 and appointed the Inquiry Officer. We also find that the said Inquiry Officer after conducting of detailed inquiry and examining the documents produced by the appellant as well as the exporter has exonerated the appellant by holding that they have not violated any of the Regulations 11 (a) (d) (e) (f) (n) of CBLR, 2013. The only fault found by the Inquiry Officer against the appellant was lack of supervision towards the work carried out by the person employed by him who was a trainee officer. Further, there is no finding of the Inquiry Officer against the involvement of the appellant in the offence committed by the exporter regarding the overvaluation of the export goods. In view of the finding of the Inquiry Officer, it was not required to pass the impugned order by the Commissioner of Customs. Further, the Commissioner has also violated the principles of natural justice without putting the appellant to notice the reasons for his dis-agreement with the findings of the Inquiry Officer which according to us is the basic requirement of law - Further, in various decisions this Courts have consistently held that the extreme penalty of revocation should be invoked only when there is a clear involvement of the appellant in mis-declaring the value of the goods in order to avail pecuniary benefits. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Revocation of Customs Broker License under Regulation 14 read with Regulation 17 of the Customs Broker Licensing Regulation, 2018.
2. Forfeiture of security deposit under Regulation 14.
3. Imposition of penalty of ?50,000/- under Regulation 14 read with Regulation 17 and 20 of Customs Broker Licensing Regulation, 2018.
4. Alleged violations of Regulation 11 (a) (d) (e) (f) & (n) of CBLR, 2013 (now Regulation 11 (a) (d) (e) (f) & (n) of CBLR, 2018).
5. Principles of natural justice and procedural fairness.
6. Proportionality of the penalty imposed.

Detailed Analysis:

1. Revocation of Customs Broker License:
The Commissioner (Appeals) revoked the Customs Broker License of the appellant under Regulation 14 read with Regulation 17 of the Customs Broker Licensing Regulation, 2018. This action was based on allegations of mis-declaration and overvaluation in export consignments to claim undue drawback and rebates. Although the Inquiry Officer exonerated the appellant from charges of violating Regulation 11 (a) (d) (e) (f) & (n) of CBLR, 2013, the Commissioner still proceeded with revocation without providing notice for disagreement with the Inquiry Officer's findings, thus violating principles of natural justice.

2. Forfeiture of Security Deposit:
The Commissioner also ordered the forfeiture of the appellant's security deposit under Regulation 14. The Inquiry Officer's report, which exonerated the appellant, was not adequately considered. The Tribunal found that the Commissioner’s action was unjustified, especially since the Inquiry Officer had not found substantial evidence of collusion between the appellant and the exporter.

3. Imposition of Penalty:
A penalty of ?50,000/- was imposed on the appellant under Regulation 14 read with Regulation 17 and 20. The Tribunal noted that the penalty was disproportionate to the alleged contravention, given the lack of substantial evidence against the appellant. The Inquiry Officer had already cleared the appellant of significant violations, and the Commissioner’s decision to impose a penalty was seen as excessive.

4. Alleged Violations of Regulation 11 (a) (d) (e) (f) & (n):
The appellant was accused of violating several provisions of CBLR, 2013. The Inquiry Officer’s detailed examination found no substantial evidence of such violations. The Tribunal emphasized that the Commissioner failed to justify the allegations adequately and ignored the Inquiry Officer’s findings without proper notice to the appellant.

5. Principles of Natural Justice:
The Tribunal highlighted the violation of principles of natural justice. The Commissioner did not notify the appellant of the reasons for disagreeing with the Inquiry Officer’s report, which is a fundamental requirement. This procedural lapse was critical in the Tribunal’s decision to set aside the impugned order.

6. Proportionality of the Penalty:
The Tribunal found the penalty of revocation and forfeiture disproportionate. Citing various judicial precedents, it was emphasized that extreme penalties should only be imposed when there is clear evidence of involvement in fraudulent activities. The appellant’s actions did not warrant such severe punishment, especially when the Inquiry Officer had cleared them of major violations.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal. It was concluded that the Commissioner’s actions were not sustainable in law due to procedural lapses, lack of substantial evidence, and the disproportionate nature of the penalties imposed. The appellant’s license was restored, and the penalties were revoked, reaffirming the importance of adherence to principles of natural justice and proportionality in administrative actions.

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